guleed_ali Posted October 24, 2013 Rahima;982837 wrote: ^ The problem with Islamic banking these days is that whilst in principle they appear to be halal, when you get down to the nitty gritty detail you find that there really isn’t much difference between them and the interest based banks. With the two options you described, option 2 is only halal if the bank owned the property before you even approached them and option 1 is often fudged by these banks when it comes to the calculations where you realise that they just replace interest with rent . In saying that though- I too believe that wanting to move away does not mean that we shouldn’t invest in property if you can find a halal way. The way I see it is, even if I move (which I plan to inshallah), I can always rent out my house. "That is because they say: Trade is just like usury; whereas Allah permitteth trading and forbiddeth usury" 2:275 Sister Rahima you don't want to be like those people so I suggest you be very careful in how you talk. Banks "lend" you money and make money based on the time value of that money (interest rate). Whereas an Islamic bank actually purchases the home and resells it to you with a prescribed rental rate and a declining principal ending in ownership. The two may be similar but in fact they are not and that is what Allah refers to in Surat Al Baqarrah. May Allah forgive us for our sins (Allahuma Ameen). Quote Share this post Link to post Share on other sites
dhugfe Posted October 24, 2013 Rahima;982837 wrote: ^ The problem with Islamic banking these days is that whilst in principle they appear to be halal, when you get down to the nitty gritty detail you find that there really isn’t much difference between them and the interest based banks. With the two options you described, option 2 is only halal if the bank owned the property before you even approached them and option 1 is often fudged by these banks when it comes to the calculations where you realise that they just replace interest with rent. In saying that though- I too believe that wanting to move away does not mean that we shouldn’t invest in property if you can find a halal way. The way I see it is, even if I move (which I plan to inshallah), I can always rent out my house. the rent in option 1 is not interest, the thing is, both you and the bank own the equity to the house based on the proportion of your down payment. for example if you put 20% down, your equity is 20% and the bank's 80%. the payment you make are actually two payment. in the first one, you pay rent for living in the home the whole home freely without any interference from the bank (the co owner); an easement. on the second payment you buy the equity owned by the bank over time, increasing your equity and decreasing that of bank. the most critical moment here is, the fact that, unlike interest based mortgages, both you and the bank share what ever risk/profits that might come with the home. For instance if the home's value plummets, you only owe whatever your equity on the home was on that day and the bank shoulders the rest. That is huge, and if I am not mistaken, it is what makes it halal. Quote Share this post Link to post Share on other sites
Rahima Posted October 26, 2013 guleed_ali;982905 wrote: "That is because they say: Trade is just like usury; whereas Allah permitteth trading and forbiddeth usury" 2:275 Sister Rahima you don't want to be like those people so I suggest you be very careful in how you talk. Banks "lend" you money and make money based on the time value of that money (interest rate). Whereas an Islamic bank actually purchases the home and resells it to you with a prescribed rental rate and a declining principal ending in ownership. The two may be similar but in fact they are not and that is what Allah refers to in Surat Al Baqarrah. May Allah forgive us for our sins (Allahuma Ameen). No need to warn me- you misunderstood what i was trying to get across. I'm not saying that Islamic banking (as it should be) is the same as the interest based baking system. What i was saying is that many of the so called Islamic banks aren't really any different from the riba based banks. Whilst what you describe is an element of the correct Islamic system, it must be coupled with shared risk and gain, meaning that if all of a sudden house prices fall and you wish to sell up for whatever reason, the bank is entitled to only their share of the final sale price, and not the paying out of what was left originally. Similarly, if you wish to sell when the house price has increased, the bank is entitled to their share of the profit as the rent is simply their right to you living in the part of the house they own. Now, the question is, do the current "Islamic" banks work that way? Quote Share this post Link to post Share on other sites
Rahima Posted October 26, 2013 dhugfe;982907 wrote: the rent in option 1 is not interest, the thing is, both you and the bank own the equity to the house based on the proportion of your down payment. for example if you put 20% down, your equity is 20% and the bank's 80%. the payment you make are actually two payment. in the first one, you pay rent for living in the home the whole home freely without any interference from the bank (the co owner); an easement. on the second payment you buy the equity owned by the bank over time, increasing your equity and decreasing that of bank. the most critical moment here is, the fact that, unlike interest based mortgages, both you and the bank share what ever risk/profits that might come with the home. For instance if the home's value plummets, you only owe whatever your equity on the home was on that day and the bank shoulders the rest. That is huge, and if I am not mistaken, it is what makes it halal. Exactly, that is how it should be but as i asked above, do the "Islamic" banks work that way? I haven't seen any that do. Quote Share this post Link to post Share on other sites
Alpha Blondy Posted October 26, 2013 i don't understand people who take mortgages out. it's foolish. just pay it in cash. Quote Share this post Link to post Share on other sites
Safferz Posted October 26, 2013 Alpha Blondy;983024 wrote: i don't understand people who take mortgages out. it's foolish. just pay it in cash. Do you have $400k lying around? Quote Share this post Link to post Share on other sites
Alpha Blondy Posted October 26, 2013 Safferz;983028 wrote: Do you have $400k lying around? in my world $10,000 will suffice, thanks. what sort of house costs $400k Prof. Saffz? taking a mortgage out is a confirmation of being reer galbeed. it's haram. it proves to me and all other self-respecting persons that y'all are bonkers. what's wrong with y'all, baal? can't y'all invest this dosh in y'alls homelands? aren't y'all aware of the huge potential to build y'all's dream house for next to nothing? i'm not surprised by y'all's ignorance. wayoow....because y'all are all about 2.4 children, a car, a pet - preferably a cat and a mortgage. DISGUSTING. Quote Share this post Link to post Share on other sites
DoctorKenney Posted October 26, 2013 With a lack of better options in many communities here, renting seems like a much better option than taking out a mortgage loan. And there are many Economists and others who say the same thing. And these are Non-Muslims who are stating this. We Muslims have an even bigger incentive to rent our homes to avoid Riba. Rent, don't buy. Quote Share this post Link to post Share on other sites
Alpha Blondy Posted October 26, 2013 ^ islamically endowed they say about you. balse, you're not clued up economically, abti? kulaaha rent.....malaha the custodians of the holy cities are paying for this rent? Quote Share this post Link to post Share on other sites
Tallaabo Posted October 26, 2013 Why not just buy a caravan and move into a Gypsy camp? Quote Share this post Link to post Share on other sites
Safferz Posted October 26, 2013 Alpha Blondy;983030 wrote: in my world $10,000 will suffice, thanks. what sort of house costs $400k Prof. Saffz? taking a mortgage out is a confirmation of being reer galbeed. it's haram. it proves to me and all other self-respecting persons that y'all are bonkers. what's wrong with y'all, baal? can't y'all invest this dosh in y'alls homelands? aren't y'all aware of the huge potential to build y'all's dream house for next to nothing? i'm not surprised by y'all's ignorance. wayoow....because y'all are all about 2.4 children, a car, a pet - preferably a cat and a mortgage. DISGUSTING. lol $10k is less than what my parents had to pay to put in new flooring in like two rooms last month. $400k is cheap for a house, average property in Toronto is over $500k I believe. You'd be surprised by what a million dollar home looks like. Quote Share this post Link to post Share on other sites
DoctorKenney Posted October 26, 2013 Alpha Blondy;983033 wrote: ^ islamically endowed they say about you. balse, you're not clued up economically, abti? kulaaha rent.....malaha the custodians of the holy cities are paying for this rent? LOL saaxib....renting is a much better option than buying. Unless you want to live in Hooya's house for several years, save up your money, borrow some money from your Uncle's, sell your car, cat, clothes, books, TV's, and then purchase your house... I don't think many people would wanna do that. So renting seems much better Quote Share this post Link to post Share on other sites
Alpha Blondy Posted October 26, 2013 Tallaabo;983038 wrote: Why not just buy a caravan and move into a Gypsy camp? ^ i suppose i'll have to rent a caravan according to the manhaj of Dr. Kenny. should i rent a wife too? malaha i'll do a quick muta like the Shia folks? that's like renting oo kale, horta, somaha? let's all rent everything. it's the better option for most of lives difficult choices. renting. you heard it. Quote Share this post Link to post Share on other sites
